Which are the safest government bond markets in Europe?

Yields on Swedish government bonds have dropped to their lowest ever levels relative to Germany today as investors flee traditional safe havens amid the eurozone panic.

The move has made AAA-rated Swedish 10-year government bonds one of the safest havens in Europe, according to Bloomberg data.

Yields have dropped to 1.799% on 10-year Swedish government bonds, while yields on 10-year German bunds are now at 2.2%.

Switzerland – which saw yields on its short-dated government debt turn negative last month – is also yielding less than Germany, with 10-year bonds paying out 0.84%. Meanwhile Denmark is paying 1.892%.

A disastrous German bund auction last week saw a worrying lack of demand for bunds, which have historically been perceived as a safe haven.

The crisis has called into question the safety of virtually all the world’s perceived bond market safe havens, with bunds and gilts all seeing yields rise sharply in the last week.

UK gilts also suffered their least popular auction this week with a bid-to-cover ratio of just 1.61 times.